Medical debt relief program proves beneficial to hospitals

The Triad’s three healthcare systems will receive a combined $2.8 billion in additional federal Medicaid funds in fiscal 2025-26 for participating in the state’s new medical debt relief program.

The program requires hospitals to forgive more than a decade of existing medical debt for eligible North Carolinians and prevent the accumulation of new debt going forward. Past medical debt that exceeds 5% of a person’s annual income will be relieved.

All 99 hospitals in North Carolina agreed in August to participate in the program that could benefit up to two million low- and middle-income residents.

Participating hospitals will receive a higher level of Medicaid reimbursement under the Healthcare Access and Stabilization Program that was a key component of the state Medicaid program expansion.

Atrium Health is the largest benefactor of the participation agreement while Novant Health is third and Cone Health is seventh.

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When it comes to the Triad metro hospitals, Atrium Health Wake Forest Baptist will receive a significantly bigger payment because it serves a larger Medicaid population base than Moses Cone and Forsyth Medical Center.

According to an N.C. Department of Health and Human Services analysis, Atrium is scheduled to receive $1.1 billion for fiscal 2024-25 and $1.7 billion in fiscal 2025-26. If it did not participate, the amounts would be $890.2 million for 2024-25 and $892.5 million for 2025-26.

By comparison, Novant is scheduled to receive $492.7 million for fiscal 2024-25 and $751.4 million in fiscal 2025-26. If the health system did not participate, the amounts would be $389.2 million for 2024-25 and $390.7 million for 2025-26.

Cone is scheduled to receive $223.1 million for fiscal 2024-25 and $340 million in fiscal 2025-26. If Cone did not participate, the amounts would be $176.3 million for 2024-25 and $176.8 million for 2025-26.

“Medical debt is not a choice, and it’s monumental to have North Carolina hospitals committing to be part of eliminating medical debt for their patients,” Gov. Roy Cooper said in stating his support for the program. “By joining this first-in-the-nation solution, they are raising the bar for healthcare and together we will make a life-changing difference for our families and our economy.”

There are several eligibility requirements included with the Healthcare Access and Stabilization Program:

• Relieve all medical debt deemed uncollectible dating back to Jan. 1, 2014, for any individuals not enrolled in Medicaid with incomes at or below at least 350% of the federal poverty level — currently $90,370 for a family of three — or for whom total debt exceeds 5% of annual income.
• Relieve all unpaid medical debt dating back to Jan. 1, 2014, for individuals who are enrolled in Medicaid.
• Provide discounts on medical bills of between 50% and 100% for patients with incomes at or below 300% of the federal poverty level, with the amount of the discount varying based on the patient’s income.
• Not sell any medical debt for consumers with incomes at or below 300% federal poverty level to debt collectors.
• Not report a patient’s debt covered by these policies to a credit reporting agency.

The N.C. Healthcare Association said its members “are committed to the care and well-being of all North Carolinians, and we recognize that medical debt is a concern for many. That is why hospitals focus every day on providing care to all, regardless of a patient’s ability to pay.

“We stand ready to help assist hospitals with implementation of the new debt relief program.”

Although Atrium has agreed to sign on to the debt-relief program, it has expressed concerns about the plan. The policy could add to the struggles of rural hospitals, leave people with less incentive to get health insurance and drive up insurance premiums, Atrium officials wrote in a letter to state Health Secretary Kody Kinsley.

DHHS has partnered with a nonprofit organization to support participating hospitals and help them identify medical debt that is eligible for relief.

Hospitals are to also curb aggressive debt collection practices for low-income patients.

In August 2023, Duke University released a study that looked at how many lawsuits hospital systems in the state had filed against patients. The study found that 5,922 medical-debt lawsuits were filed between January 2017 and June 2022. Nonprofit hospitals were responsible for 90.6% of those lawsuits. Atrium was determined to have filed 2,487 of those lawsuits — or 42%.

Atrium has since stopped filing liens against patients who have overdue bills and ended the practice of filing lawsuits in November 2022.

Senate leader Phil Berger, a Rockingham County Republican, has expressed concerns about the potential politicization of the medical debt relief effort as well as his preference for a legislative solution.

“We don’t know the tax implications, the enforcement methods or more importantly how a rural hospital that survives on a month-to-month basis is going to meet some of these immediate requirements,” he said.

rcraver@wsjournal.com

336-727-7376

@rcraverWSJ

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